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England's regional airports issue APD devolution warning

Regional airports in England today warn that passenger numbers could fall by around 2.2 million by 2025 without policies to mitigate the effects of Air Passenger Duty cuts in Scotland and Wales.

Eight regional airports, including Birmingham, Bristol (pictured), Liverpool and Newcastle, have joined forces to respond to the government’s discussion paper on the options for supporting them from the potential devolution of APD to Scotland and Wales.

Meanwhile, the Board of Airline Representatives in the UK (Bar UK) claims the government has a unique opportunity to review APD to create a fairer air tax for the whole of the UK.

Powers to devolve APD to Scotland are currently being debated in Parliament and the government is also considering devolving the same powers to Wales.

The alliance of airports say that the impact, particularly for those in the north of England, is so great that to ‘do nothing’ is not an option and any reductions in APD in Scotland need to be matched across the rest of the country.

If UK-wide matching is not possible, then Scottish cuts in the air tax should be matched at all non-congested UK airports, they argue in a joint letter to chancellor George Osborne.

This would, they argue, meet the prime minister’s commitment made during the General Election campaign that the government will ensure other airports “don’t lose out”.

Newcastle airport chief executive, David Laws, said: “All of our regional airports play a vital role in supporting the local economy and connecting businesses across England with opportunities around the world.

“This devolution of powers has the potential to greatly damage this positive impact.

“Our modelling shows, if APD was lowered for non-congested regional English airports, they would be protected from the impacts of devolution to Scotland and that such an approach would help to rebalance the economy while assisting key government strategies.”

“Our modelling also shows that if a 50% reduction in Scotland is matched at non-congested airports across the rest of the country, then passenger numbers at English regional airports would increase by up to 6.5 million per year by 2025.

“If a 100% reduction in Scotland is matched then the number would be boosted by 16.5 million per year by 2025.”

Bar UK argues that the negative economic impacts of the highest tax of its kind in the world is driving devolved bodies to consider slashing, or abolishing, APD to gain a competitive advantage for their regions.

Bar UK chief executive, Dale Keller, said: “The government’s priority should be to grasp this opportunity to finally resolve the fundamental economic, competitiveness and fairness issues of APD for consumers and businesses, rather than give serious consideration to the three half-baked proposals to assist English regional airports with differential rates of air tax, as presented in the Treasury’s current APD discussion paper.

“Why should flying from one UK airport or region cost more in tax than another? With Scotland’s commitment to halve APD by 50% and potentially abolish it altogether, now is the time for the UK government to take the lead and abolish, or significantly reduce, APD for the benefit of the entire UK.”

David Cameron said during the election campaign: “The SNP government in Scotland is committed to using its new powers to cut and eventually abolish Air Passenger Duty from Scottish airports.

“This could distort competition and see business drawn north of the border with a huge impact on airports in the rest of our country so we’re reviewing the way Air Passenger Duty works to make sure other cities don’t lose out.”

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